Business Assignment- Purchase Millwork Ventures

Business Assignment- Purchase Millwork Ventures

63million Purchase Millwork Ventures
22millions Investment in Holistic
34millions Investment in Kansas bonds
64millions Investment in Household



Problem 12-7 


($ in millions)
December 29
Cash
Investment revenue

December 31
Accrued interest:
Investment revenue receivable - Holistic 
Entertainment 
Investment revenue receivable - Household 
Plastics 
Investment revenue 

Revaluations:
Net unrealized holding gains and losses—OCI
Fair value adjustment 

Fair value adjustment 
Net unrealized holding gains and losses—I/S 


Note: Securities held-to-maturity are not adjusted to fair value.

Closing entry:
Net unrealized holding gains and losses—I/S (NXS)
Investment revenue 
Gain on sale of investments (U.S. Treasury bonds)
Loss on sale of investments (Kansas Abstractors)
Income summary (to balance)

Note: Unlike for securities available-for-sale, unrealized holding gains and losses are included in income for trading securities.
 
2012
January 7
Cash
Loss on sale of investments (to balance)
Investment in NXS common shares (account balance)

Assuming no other transactions involving trading securities, the 2012 adjusting entry to remove the fair value adjustment associated with the sold securities would be:
December 31
Net unrealized holding gains and losses—I/S
Fair value adjustment (account balance)